American Family Mutual Insurance v. Bower
752 F. Supp. 2d 957
N.D. Ind.2010Background
- Six Gold Star homeowners policies issued Aug 2, 2000–Jan 24, 2005; Jonathan was an additional insured under those policies.
- Butler, a minor, alleges molested by Jonathan in 2003–2004 at 5210 Timbers End Place; Jonathan pled guilty to three counts of child molesting.
- Butler sues the Bowers and The Church, asserting negligent supervision, in loco parentis, and related claims; Butler seeks bodily injury, emotional distress, punitive damages.
- American Family seeks a declaratory judgment on coverage and duty to defend; Church coverage and policy exclusions are involved.
- Church on Fire was not insured under the Policies until 2005; the court considers whether exclusions apply and whether severability affects coverage and defense obligations.
- The court grants in part and denies in part American Family’s Second Motion for Summary Judgment, focusing on occurrences, exclusions, intra-insured issues, and Church-related coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether an occurrence triggers coverage under the policies | Bowers’ negligent acts are an occurrence; severability requires separate consideration per insured | Jonathan’s molestation is the sole non-accidental act; severability should not create coverage | Occurrence found under severability; duty to defend exists for Bowers. |
| Whether sexual molestation, intentional acts, or violation-of-law exclusions bar coverage for co-insureds | Exclusions do not apply to innocent co-insureds under severability | Exclusions apply to any insured and can bar coverage for co-insureds | Sexual molestation, intentional acts, and criminal acts exclusions do not preclude coverage for co-insureds' negligent acts. |
| Whether intra-insured exclusion (in loco parentis) bars coverage for Butler’s claims | Butler’s in loco parentis theory could bring her under insured category; exclusion may apply | Evidence does not support in loco parentis; exclusion should not apply | Summary judgment denied on intra-insured exclusion; material facts remain. |
| Whether exclusions for Church on Fire-related acts exclude coverage for the Church and pastor | Church not on insured premises; business pursuits and professional liability exclusions may apply | Exclusions depend on where acts occurred and whether Pastor acted professionally on insured premises | Church coverage denied; business pursuits and professional liability exclusions undecided on the facts; Church not covered under the policies. |
| Whether punitive-damages exclusion bars coverage for Butler’s punitive-damages claim | Punitive damages are excluded by the policy language | Policy language clearly excludes punitive damages; insurer should win on this point | Punitive damages exclusion granted; no coverage for punitive damages. |
Key Cases Cited
- Wayne Tp. Bd. of Sch. Com’rs v. IndianaIns. Co., 650 N.E.2d 1205 (Ind.Ct.App.1995) (severability separate insureds, liability assessed per insured)
- Frankenmuth Mut. Ins. Co. v. White, 690 N.E.2d 675 (Ind.2005) (intentional acts exclusion does not apply to negligent supervision against another insured)
- Indiana Farmers Mut. Ins. Co. v. North Vernon Drop Forge, Inc., 917 N.E.2d 1258 (Ind.Ct.App.2009) (definition of accident; perspective of insured matters)